Learn About Pay for Performance Search Engine

January 21, 2013

As opposed to organic search results (free by nature), the majority of search engines now offer Pay for Performance (PFP) options. Pay for Performance lets you promote your site by paying for SE exposure, rather than by relying on solely organic listings determined by your SEO efforts.
There are three main types of Pay for Performance options:

-    Pay-per-click - the best examples are Google AdWords, and Microsoft adCenter. With pay-per-click (PPC) advertising, advertisers place bids for different search keywords. When users perform searches for these keywords, advertiser short, textual ads are shown together with organic results. If a user clicks on one of these ads, the advertiser is charged the per-click sum agreed to earlier.

-    Paid inclusion (or paid submission) is a fee-based inclusion into the database or directory of a search engine. The more prominent paid inclusion programs are Yahoo! Search Submit and Yahoo! Directory Submit.
-     Paid sponsorship - with this model, an advertiser pays a flat fee to a search engine. In return, the search engine shows the advertiser's ads together with search results for pre-selected keywords. ExactSeek, for example, features this pay-for-performance model.

PPC advertising is by far the most widespread form of pay-for-performance search marketing. As it's the most effective way for a search engine to make money, PPC is offered by almost every SE on Earth. However, the two most prominent providers of PPC advertising are Google (Google Adwords) and Bing (Bing AdSense).

Google AdWords is the world leader in pay-per-click advertising. Currently it has more than 2,000,000 advertisers. The ads show up not only with Google search results, but also with Google partners such as AOL search, About.com and billions of other websites that publish AdWords ads. Google has an interesting ad ranking system. It ranks ads not by the bid (the amount their owners are ready to pay for one click), but by the combination of the bid and the click-through ratio. This way, Google maximizes its revenue stream (since Revenue to Google = Bid x CTR x Views) and gives small advertisers an opportunity to effectively compete with big companies. A small advertiser cannot compete on the cost-per-click basis, but can successfully overcome any big company in terms of the click-through ratio.

AdWords gives advertisers several options to target keywords: broad matching, exact matching, phrase matching, and negative keywords. The matching options define how close the search string entered by a user should be to a keyword selected by an advertiser. If the advertiser has chosen [web Design] as their keyword (square brackets mean exact match), their ad will be shown only if a user enters web design into the search box. If the advertiser has chosen "web design price" (quotes mean phrase match), the ad shows up if a user searches for “affordable web design price”  or “how much web design price” or simply “web design”. Finally, if the advertiser has chosen web design price with no brackets or quotes around it (for a broad match), the ad will show up even if a user enters “how to learn web design” or “modern design”. With negative keywords, advertisers can prevent their ad from showing up if a user enters this keyword. For example, a retailer would usually add -free, -replica to the keywords list to avoid targeting "free stuff" hunters.

Currently, there is a wide variety of Pay for Performance search models; however, the most widely used and accepted is PPC (pay-per-click) advertising. One recent development with AdWords was the release of AdWords API (application program interface) that will allow third-party developers to create applications that will work directly with AdWords accounts facilitating and automating many bid and ad management tasks.

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